Raymond Frenken

The head of Luxembourg’s fund and asset management industry association on Tuesday gave its full backing to a government plan to make the Grand Duchy’s tax laws friendlier for investors in active ETFs, a product that is experiencing considerable investor interest across Europe.

Jean-Marc Goy, president of the Association of Luxembourg’s Fund and Asset Management, Alfi, told a conference that the tax treatment of active Exchange Traded Funds (ETFs) is “where improvement is needed.”

Luxembourg’s financial watchdog CSSF has disclosed that about 86,000 investor accounts, primarily belonging to everyday retail investors across Europe, are currently frozen in the Grand Duchy.

Updated European rules for long-term investment funds known as Eltifs will enter into force on 10 January 2024, but managers looking to actually launch new Eltif 2.0 funds may have to wait until the end of February because European financial supervisors still have to agree on the technical standards for supervising these products.

Consolidation, regulatory risks, and the need to stay relevant to the target audience of investors and asset owners are considered as the topics that keep C-level asset managers awake at night. At the Efama conference in Brussels on Thursday, CEOs of five firms underlined the importance of adaptability, technological integration, and maintaining a clear company purpose.

Global wealth linked to art and collectibles is projected to grow by nearly a third to 2.861 billion dollars by 2026 from the level of 2.174 billion in 2022, according to the Deloitte Luxembourg Art & Finance Report 2023.

Although discussions about environmental and social governance, or ESG, and sustainable investing may have encountered a lull during recent weeks, investors and asset owners worldwide still consider this topic as hugely significant in their discussions with asset managers, according to one of Europe’s top chief investment officers.

The UK’s financial supervisor still sees shortcomings in the asset management industry in regards to sustainable investment funds ahead of its publication of more stringent anti-greenwashing rules.  

The current approach to the EU’s retail investment strategy may not adequately address broader issues such as the retirement savings gap, reflecting a need for a more holistic approach to financial education and pension policies, a leading European industry representative argues.

European regulators, especially those in Paris and Luxembourg, are at odds over the regulatory and technical standards for the updated European Long Term Investment Funds scheme, known as Eltif 2.0, according to people familiar with the discussions.

The future of supervisory reporting by investment funds - Luxembourg is home to some 14,000 of them - is embedded into a firm’s technology infrastructure.

One example of this development is taking shape in Luxembourg, where a local data firm that was acquired by a London-based fund data specialist last year is building a one-stop solution that lets fund managers track the distribution of their funds in multiple countries and report to the relevant supervisors by pressing a single button.